Sacramento Bee

SAN FRANCISCO: The California Supreme Court on Wednesday took over a dispute in which federal judges appeared ready to slap down plans by the state Public Utilities Commission to rescue the state’s two biggest utilities.

The state justices gave no indication of what their ultimate decision on the controversy will be. The ruling could be up to a year away.

But their intervention was good news for the utilities as they prepared to resume their traditional roles as the state’s main power procurers early next year.

Two months ago, in response to a suit filed by consumer advocates, the 9th U.S. Circuit Court of Appeals said the PUC‘s plan for rescuing Southern California Edison from the brink of bankruptcy in 2001 seemed to violate state laws that control electric rates and the way they are adopted.

The plan shifted more than $3 billion in Edison debt to ratepayers and did so without public hearings. The same issues cloud the PUC‘s plan for reorganizing the debt of Pacific Gas and Electric Co., which currently is under review by a federal bankruptcy judge.

The 9th Circuit said it would defer to the state Supreme Court in making the final call on whether state laws were violated, if the state justices would take on the job. The state justices now have done so. No dissents were recorded in the court’s brief order announcing the vote.

Requests urging the justices to take the case and uphold the PUC–Edison pact were filed by the Governor’s Office, the state Chamber of Commerce and other business organizations and the Los Angeles County Federation of Labor. They called the deal a vital step in stabilizing the state energy infrastructure.

The California Assembly and Attorney General Bill Lockyer also urged the state justices to take the case because of the importance of the legal questions, but they took no positions on what the outcome should be.

Edison President Bob Foster and PUC general counsel Gary Cohen issued statements welcoming the Supreme Court action.

On the other side of the case, Harvey Rosenfield, whose Foundation for Taxpayer and Consumer Rights filed the lawsuit, said, “Billions of dollars are at stake for California ratepayers. … The California Supreme Court will now have to enforce state law to prevent the PUC‘s illegal bailout of Edison and PG&E.”

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The Bee’s Claire Cooper can be reached at (415) 551-7701 or [email protected]